Alibaba IPO divides investment opinion

While almost two-thirds (64 per cent) of the financial industry sees Alibaba Group as a good long-term investment, less than half (43 per cent) intend to buy shares in the group’s forthcoming IPO, according to a survey by ConvergEx.

More than half are expecting an appreciation in the share price of more than 10 per cent in the first month but less than one third (30 per cent) are currently invested in Chinese companies.

“Alibaba is one of the most-discussed IPOs in years, and could become the biggest IPO of all time. Yet our survey reveals real questions that go beyond confidence in the company’s fundamentals or the ability of US market structure to handle an IPO of this size,” says Nicholas Colas, ConvergEx Group chief market strategist. “Market participants clearly recognise Alibaba’s potential, but are they fully comfortable with investing in a Chinese company? For other Chinese companies seeking access to global capital, Alibaba will represent either a real breakthrough or a major setback.”

For buy-side survey participants, willingness to buy Alibaba correlated closely with their current ownership of Chinese equities: 60 per cent of those who own Chinese shares plan to buy Alibaba as well, while just 38 per cent of non-owners plan to buy Alibaba, either at or after the IPO.